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Case Law Alerts

In a New York Conflict of Law Professional Malpractice Action, Appellate Court Affirmed Plaintiff Did Not Show that New Jersey Had Substantial Interest in the Litigation.

JZS Madison, LLC v. Kramer Levin Naftalis & Frankel, LLP and Jay Neveloff, Appellate Docket No.: A-0326-22 (Unpublished), Sept. 9, 2024

October 1, 2024

by Pauline F. Tutelo

This matter deals with a conflict of law related to a professional malpractice action. The plaintiff, JZS, a New York company with a principal place of business in New Jersey, sued Kramer Levin Naftalis & Frankel, LLP, a New York law firm, and Jay Neveloff, Esq., a partner in the firm and a member of the New York Bar, for legal malpractice. 

Suit was filed in New Jersey, which has a six-year statute of limitations on professional malpractice claims. New York has a statute of limitations of three years. After limited discovery on this issue, the defendants filed a motion to dismiss, taking the position this was a New York matter and the New York statute of limitations applied. The defendants argued the plaintiff filed its complaint after the expiration of the New York statute of limitations and, therefore, the matter should be dismissed with prejudice. The trial court dismissed the matter with prejudice, holding that New York law applied on this issue and that the plaintiff failed to comply with the applicable statute of limitations. 

The plaintiff appealed, and the appellate court affirmed the trail court decision. The appellate court, applying the test set forth in McCarrell v. Hoffman-LaRouche, Inc., 227 N.J. 569 (2017), held that the plaintiff had failed to show that New Jersey had a substantial interest in the litigation. The fact that the plaintiff’s principal place of business was in New Jersey, its manager was a New Jersey resident and could be financially harmed, did not create a substantial interest in New Jersey. This was the matter’s only connection to New Jersey. All other information uncovered during discovery revealed that nearly all relevant facts point toward New York, including: (1) JZS had no certificate of authority to do business in New Jersey; (2) JZS did not own or lease any New Jersey real estate; (3) JZS was formed to own properties in New York; and (4) JZS’s registered office and registered agent were located in New York.

Based on the above, the court affirmed the trial court’s decision, dismissing the plaintiff’s complaint with prejudice for failure to comply with the New York statute of limitations. 

 

Case Law Alerts, 4th Quarter, October 2024 is prepared by Marshall Dennehey to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2024 Marshall Dennehey, all rights reserved. This article may not be reprinted without the express written permission of our firm.

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In Martin v. Loury, 2026 N.J. Super. Unpub. LEXIS 1617 (App. Div. July 15, 2026), Martin Law Firm represented Kirk Loury in an employment matter Mr. Loury filed against his former employer, Concord Equity Group Advisors LLC (“Concord”). The allegations included, among other things, that Loury was not fairly compensated for his employment with Concord. After a bench trial finding in Loury’s favor, the Appellate Division remanded this matter in February 2016 for a second trial. During the second trial, Concord CEO, Lee Argush, testified to lower compensation estimate than first trial. On remand, the second trial judge awarded Mr. Loury the same damages as the first judge, finding Mr. Argush not credible. After the findings during the second trial, Martin Law Firm filed an action against Mr. Loury to recover legal fees and costs of representing Mr. Loury in a second bench trial and Mr. Loury filed a counterclaim against Martin Law Firm for legal malpractice, alleging he should have received an even higher award in the second bench trial. In this allegation, Mr. Loury, through his expert, claimed that Martin Law Firm should have recalled Mr. Loury to the stand to rebut Mr. Argush’s testimony to allege an alternative theory of damages. Mr. Loury’s expert admitted that the second judge already rejected Mr. Argush's theory and accepted Loury's damages theory. The trial court barred Mr. Loury’s expert and dismissed Loury's counterclaim with prejudice before convening the collection trial, and the jury ruled in Martin Law Firm’s favor. Mr. Loury appealed the trial court's pretrial rulings barring his liability expert from testifying in support of his legal malpractice counterclaim, denying his motion for summary judgment on that counterclaim, and denying his motion to amend his counterclaim by adding attorney Joseph A. Martin as a codefendant. In affirming the trial court’s decision, the Appellate Division held that the trial court properly excluded Loury’s expert testimony in the counterclaim against Martin Law Firm because the expert could not explain how calling Loury as a rebuttal witness would have increased damages when the second judge already rejected Mr. Argush's testimony and accepted Loury's damages theory, making the expert’s causation opinion speculative. The Appellate Division also held that the trial court properly denied Mr. Loury's summary judgment motion on his malpractice counterclaim because reasonable minds could differ on whether Mr. Martin's alleged failures would have changed the second judge's damages award, given the judge already found Mr. Argush not credible, creating genuine factual disputes precluding summary judgment. Also, the Appellate Division held that the trial court properly denied Loury's May 2023 motion to add Joseph Martin individually because the statute of limitations expired in February 2022, six years after the 2016 appellate remand when Mr. Loury incurred new legal costs, and relation back did not apply because Mr. Loury knew Mr. Martin's identity throughout and strategically chose to sue only Martin Law Firm in his 2019 counterclaim.

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In the matter of Edelstein v. Kirschner, No. N25C-09-018 FJJ, 2026 Del. Super. LEXIS 45, at *1 (Super. Ct. Jan. 29, 2026), the plaintiff law firm sued its former client for unpaid legal fees in the amount of $4,399.35. The former client asserted a counterclaim alleging legal malpractice. More, specifically, the former client claimed that his lawyer committed malpractice be recommending that he settle an underlying lawsuit by entering into a stipulated judgment for an excessive amount with interest that was accruing at “an outlandish” interest rate. The law firm moved to dismiss the counterclaim on the basis that its former client had not alleged facts reflecting that he could prove the case within the case. That is, facts reflecting that his attorneys caused him to lose the underlying case. The Superior Court held that while a legal malpractice plaintiff in cases arising from underlying litigation must prove the case within the case to survive a summary judgment motion, he does not need to plead facts reflecting as much in order to survive a motion to dismiss. While this case addresses the pleading requirements of a legal malpractice case in Delaware, it also serves as reminder that chasing unpaid legal fees from a former client can often give rise to a legal malpractice counterclaim. Attorneys seeking to collect unpaid legal fees should ensure that the fees they seek are for a significant amount, which would be recoverable if a judgment is obtained. Otherwise, the effort could backfire.